Time for India’s budget to devote enough space for climate action
Previous budgets have looked at solar projects, EV manufacturing, and the National Green Hydrogen Mission, but the need to speed up climate action remains.
How do you cost for climate change? The Union government will be presenting the annual Budget later this month, and this question perhaps will be among their greatest challenges.
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In its annual report this year, the Reserve Bank of India has identified increasing climate shocks as a risk to the Indian economy. Last year, the apex bank’s report on Currency and Finance outlined climate change’s impact on the country. Importantly, it mentioned financing requirements to the tune of 2.5% of India’s GDP annually till 2030. India is already seventh on a list of most-vulnerable countries in the world.
That is why the Union Budget this year is an extraordinary opportunity to shape India’s climate action. Fund allocations are the lifeline for government ministries and departments, and their expenditures in turn fuel on-ground activities. Well thought-out subsidies, regulations and schemes can also incentivise private players to commit their resources. The need to act is evident.
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As climate impacts become more apparent, the priorities to mitigate them and adapt to them are bound to increase. For example, we saw an incredibly difficult summer in many parts of the country. Longer and intense heatwave spells will require appropriate public responses such as infrastructure changes and agriculture shifts, which might not be covered by existing government missions or schemes.
Budgets for climate-relevant activities are currently included in the regular budgeting process and are implemented through various departments and ministries. The needs will inevitably call for Budget prioritisation, which is a challenging task even now.
What’s encouraging though is that, through previous Budget announcements, the government has consistently shown interest in acting on climate change and amplifying sustainability. The Interim Budget this year too held hope. We saw a push towards solar power projects, including large scale solar rooftop installations for individual households. Support for EV charging manufacturing and infrastructure, and an increase in allocations to the National Green Hydrogen Mission were other promising developments. We’re making progress, but the need to speed up climate action remains.
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For example, global regulations like the Carbon Border Adjustment Mechanism (CBAM), a tariff by the European Union that accounts for emissions of carbon intensive imports, can be an opportunity for first movers. Indian exports could receive a boost if emissions involved in the overall manufacturing process are reduced. Globally, more and more businesses are asking for low-carbon products. Our initiatives such as RE100 and EP100 are facilitating the energy transition, but businesses would also need fiscal and non-fiscal decisions from the government to expedite the transition.
In our work with leading businesses in our RE100 initiative, we’ve seen their aim to procure renewable electricity to meet their energy needs. Among their challenges, however, has been the inability to secure renewable electricity consistently across states. To make renewables an enticing proposition, their access will thus have to be part of ease-of-doing-business in the future.
That brings me to my next point. Ecosystems that hold up India’s climate ambition are often overlooked. In the case of renewable energy, this would entail supporting renewable energy providers. Attracting more capital and improving local manufacturing of solar and wind power are some steps that the Budget can facilitate.
Another example of these ecosystems are the states. Some of India’s states and even cities are championing climate budgeting. Mumbai recently released its Climate Budget Report for this year. Bihar, Assam, Meghalaya are among states who have released Green Budgets too. States must be a priority as they are on the frontlines of climate action.
2030 is an important year. India aims to increase its renewable electricity installation capacity to 500 GW by then. The Sustainable Development Goals will culminate the same year. Both are substantial goals to meet. With the right set of decisions, this Budget thus has the potential to outlive its tenure by making climate action the focus of India’s development story.
